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Taxed to death

Will the lack of an estate tax in 2010 (before reverting to 55% in 2011) cause a spike in deaths? Well, across the 13 major estate-tax changes since the law’s creation in 1916 there was a small but statistically significant change noticed (pdf). The study reported “the chance of dying increased slightly in the two weeks before rates went up and decreased in the two weeks after an estate-tax cut.” This “death elasticity” was also noticed is other countries and is “particularly dramatic when countries eliminate inheritance taxes altogether.”

According to Time, no one is expecting a “death wave in December” since they cite math that only 1 in 460 Americans has an estate large enough to be taxed, and of these, typically only 5,500 die annually. But estate planning attorneys suggest at least 20 – 30 people will hasten their death to avoid heirs paying taxes.